SMM Network News:
Core point of view
Copper export, as the connecting point of copper consumption at home and abroad, on the one hand, under the background of the high risk of secondary impact of the current overseas epidemic, is a weather vane for observing the recovery and changes of overseas consumption; on the other hand, as an important part of domestic consumption, it affects the domestic consumption structure, so it is of great significance to understand the export of copper consumer goods.
The export of copper consumer goods in 2019 contains about 3.08 million tons of copper, accounting for 26% of the total domestic consumption of 12 million tons in 2019 (excluding refined copper exports). In addition to copper (4 per cent) the market tends to focus on wires and cables, large household appliances and motors, which use about 1.51 million tons of copper, accounting for 13 per cent of total copper consumption.
Exports, which account for about 9% of domestic consumption, are easily overlooked, including small household appliances, kitchen electricity, consumer electronics, industrial and agricultural machinery, transportation and copper products. The actual number of exports of small household appliances, electric and electrical components other than wires and cables, kitchen electricity, industrial and agricultural machinery, transportation equipment and copper products is huge, and the amount of copper used can not be ignored. The export volume of the above seven categories of copper is about 1.04 million tons, accounting for 9 per cent of the total domestic consumption.
Looking forward to the fourth quarter, copper consumption exports are expected to warm up with overseas demand and continue to recover weakly. The bright spot of exports in the fourth quarter is mainly in small household appliances, transformers for small household appliances and electronic products, which have brought new demand due to the impact of the epidemic, and are expected to maintain a relatively high growth rate. Uncertainty is the slow repair of high-value consumer durables such as large household appliances and cars, and the economic impact of the epidemic in major exporters of wires, cables and copper. Exports are expected to continue to repair in the fourth quarter, narrowing the decline. Neutral expects the year-on-year decline to narrow to 1.8% in the fourth quarter and is expected to be the same as last year in an optimistic scenario.
Major risk points: repeated epidemic situations in major exporting countries, major changes in Sino-US relations, and so on.
First, to split the export structure of copper consumer goods, which parts are easy to be ignored?
The export of copper consumer goods is the connecting point of copper consumption at home and abroad. On the one hand, under the background of the high risk of secondary impact of the current overseas epidemic, it is a weather vane to observe the recovery and changes of overseas consumption, and on the other hand, as an important part of domestic consumption of copper, it affects the structure of domestic consumption. it is of great significance to understand the export of copper consumer goods.
The proportion and structure of copper consumer goods exports? On the proportion of copper consumption exports, the views of various institutions are quite controversial. In this report, we analyze and sort out the export data of copper terminals for all kinds of machinery, electrical appliances, copper products and so on. Finally, we estimate that the export copper consumption in 2019 is about 3.08 million tons, accounting for 26% of the total domestic consumption of 12 million tons in 2019 (excluding refined copper exports). According to the industry and the corresponding customs code, the export copper consumption can be divided into six parts: electric and electrical components, home appliances, copper, electronics, transportation equipment, industrial and agricultural machinery and copper products. The main HS codes of each plate are shown in Table 1.
Copper consumer exports, which account for about 9% of domestic consumption, are easy to be ignored, including small household appliances, kitchen electricity, consumer electronics, industrial and agricultural machinery, transportation and copper products. When it comes to the export of copper consumer goods, the market often pays attention to the export of the three main copper terminal products: wires and cables, large household appliances and motors. According to customs data, about 1.42 million tons of copper were used in these three sectors in 2019, accounting for 12% of the total copper consumption. In fact, there are a large number of exports of small household appliances, electric and electrical components other than wires and cables, kitchen electricity, industrial and agricultural machinery, and copper products, and the amount of copper used can not be ignored. Copper consumption in the above seven categories of exports is about 1.04 million tons, accounting for 9 per cent of total domestic consumption.
Below we will describe in detail the use of copper in each neglected plate.
1.1 Home Appliances: small Household Appliances and Kitchen Appliances that are easy to ignore-- small single weight, many kinds, and large quantity
We think that the main reason why small household appliances and kitchen appliances are easy to be ignored is that the unit weight is small, but in fact, these small household appliances have a large order of magnitude, many kinds, and the annual copper consumption is very considerable. In addition to the air conditioners and refrigerators that we often pay attention to, we find that there are many types of small household appliances in the split, but because the total weight of the individual unit of small household appliances is only 1 kg to 15 kg, the amount of copper used in the single machine is very low, so it is easy to be ignored. The annual copper consumption of small household appliances and kitchen appliances is about 430000 tons, of which the copper consumption of small household appliances is about 260000 tons, and that of kitchen appliances is about 170000 tons.
We mainly estimate the copper consumption of all kinds of small household appliances through the investigation of small household appliances enterprises and recycling stations. We find that although the unit consumption of some small household appliances is low, the amount of copper consumption is huge, and the copper consumption is considerable. For example, the average copper consumption of fans is about 0.157kg, but 750 million units are exported in 19 years, and the average copper consumption of household coffee machines is about 0.4kg. In 1919, a total of 87.987 million sets were exported, consuming 118100 tons of copper and 35200 tons of copper, respectively. In our estimation, we mainly use household appliances, but in fact, some export household appliances are commercial appliances, which tend to have higher power and higher copper consumption, so our estimate may be on the low side.
Copper is mainly used to estimate the amount of copper in electrical appliances, and the copper in electrical appliances is mainly used in motor, connecting pipe, heat exchanger fan and other parts.
The amount of copper used in the heat exchanger is large, the heat exchanger for air conditioning is about 4-4.5KG, and the heat exchanger for water heater is about 2.2-3.15KG. Based on this, it is estimated that the largest amount of copper used in export is still the air conditioner in household appliances. Based on the copper consumption of a single air conditioner, it is estimated that the copper consumption of export air conditioner is about 380000 tons. The copper consumption of a gas water heater is about 3.15KG. The copper consumption of single dishwasher is 2.27kg, that of kitchen waste disposal is 1.04kg, the average copper consumption of dryer and clothes dryer is 1.22KG and 0.91kg respectively, and the copper consumption of other electrical appliances is relatively small.
1.2 Electric and electrical components: a big thing that is easy to be ignored-- super large transformer has a small quantity but large unit consumption.
The export copper consumption of power and electrical parts is about 1.18 million tons. In traditional analysis, we often only focus on wires, cables, motors and other parts, which consume about 840000 tons and 100000 tons of copper respectively in 2019, accounting for 80% of the copper consumption of electric parts and components. The rest is used in sockets, switches and connectors and other components, copper consumption of about 30,000 to 60,000 tons, the order of magnitude is not large. In addition, it is mainly used in all kinds of transformers. In this study, we mainly refer to the dismantling recycling station, customer research, national standards, bidding technical parameters and relevant materials of the Copper Association to focus on the copper consumption of the transformer.
In the study, we found that the main exports of transformers are small dry-type transformers below 1KVA, with a total of 273 million in 19 years, while the number of large transformers is small, and only 320000 transformers with more than 10MVA capacity are exported in 19 years, which is easy to be ignored. However, the weight of copper in a single unit of a large transformer is very large. Taking the S9 series of 3150kVA, which is not the largest in capacity, for example, the weight of a single unit can reach 7230-7650kg, and the amount of winding wire can not be ignored. The copper consumption of the super-large transformer whose capacity exceeds 200MKVA is very considerable. According to the technical documents of a 284MKVA transformer unit and relevant national standards, the weight of the winding wire of a single transformer can be up to 9.3t. Based on the copper consumption per KVA of common transformers, it is estimated that the annual copper consumption of exported transformers is about 160000 tons.
1.3Electronic products: highly exported mobile phones, computers and resilient printed circuits (PCB)
Due to the thin wires in electronic products, the copper consumption per unit is not often ignored, but in fact, the annual export of computers and mobile phones is very huge, so we have carried out in-depth excavation in this study. mainly focus on computers, mobile phones and printed circuit boards three parts.
Copper for computers and mobile phones is mainly used in wires, power supplies, connectors, CPU shells, radiators and other components. According to relevant data from ERI, an electronic solid waste recycling organization, every 1 million mobile phones consume about 35000 pounds of copper, and each computer consumes about 0.25kg of copper. it is true that the copper consumption of a single machine is not high, but it is of the order of magnitude to export 270 million computers and 990 million mobile phones in 2019. The copper consumption is 66400 tons and 15900 tons respectively.
In addition, we are concerned that exports of many categories have been greatly affected by the epidemic this year, but printed circuits remain resilient. From January to May 2020, the export volume of China's printed circuits increased by 9% to 13.4 billion yuan compared with the same period last year. The circuit board is usually glued to the glass epoxy substrate with a layer of copper foil with a thickness ranging from 18 μ m to 70 μ m. Now the circuit board is mostly double-layer or multi-layer. According to the feedback of the industry and our research, about 56700 tons of copper will be used for the export of printed circuits in 2019.
1.4 Copper products that are common and easy to be ignored
In the study, we found that because copper products are too common, some copper products with a very large export volume are easy to be ignored. Copper is widely used in a variety of products because of its good texture and bactericidal properties. Common copper products include: ornaments and zippers on clothing, copper faucets in sanitary ware, copper pots and cutlery in kitchen utensils, and so on. In addition, copper is often added to gold and silver tableware and furnishings to improve gloss, brightness and hardness, usually 7.5% copper is added to silver tableware. Due to the excellent mechanical properties and wear resistance of brass, brass with about 65% copper content is mostly used in copper products. The copper used in sculpture is usually brass, but sometimes bronze and white copper are used for artistic pursuits. We mainly use brass as the basis for estimation.
A typical product that is easy to be ignored is a copper water meter. A single copper water meter weighs about 1.5kg, of which brass accounts for 70%. 25.6 million copper water meters are exported in 2019, and the annual copper export consumption is about 17500 tons. In addition, brass in sanitary ware is also widely used, such as various copper showers and faucets used in bathrooms. according to the weight of exports in 2019, it is estimated that the export consumption of copper is about 22000 tons.
1.5 neglected machinery
The export consumption of copper for machinery and its parts in 2019 is about 74400 tons. In terms of the use of machinery, it can be divided into agricultural machinery and industrial machinery. The application of copper and its alloy in machinery is similar to that in automobile, mainly in its radiator, gear bearing and hydraulic device, the parts mainly include oil delivery guan, gear, valve and so on.
According to the International Copper Association, the average amount of copper used by an agricultural machinery is 63 pounds, and that of an industrial (construction) machinery is 66 pounds (mainly large machinery), while the amount of copper used by the same power machinery driven by electric motors is much more than that. For example, an electric forklift uses about 138 pounds of copper, roughly twice as much as a diesel engine. In 2019, the number of machinery exported in China is relatively large, with a total of 1.3155 million concrete mixers, logging trucks and electric forklifts, with a copper consumption of about 63000 tons. In addition to large machines, some small machines also use a certain amount of copper. Among them, the amount of copper used in all kinds of pumps such as submersible pumps is relatively large, and the copper used in pumps is mainly in his motors. In 1919, 38.32 million pumps of all kinds were exported, with a consumption of about 34100 tons of copper. Hand-held machinery, such as chainsaws, winches and their parts, also use copper, but the export volume is small.
1.6 Traffic: rare ships, airplanes and a large number of electric motorcycles
In the traditional analysis, copper consumption in traffic mainly refers to all kinds of cars and passenger cars, but in recent years, the export of electric motorcycles is growing rapidly and is easy to be ignored. In 2019, the copper consumption for automobile exports is about 30900 tons, and that for passenger car exports is 6300 tons. In this study, we covered other neglected vehicles, one is electric motorcycles (bicycles), which were exported in 2019. According to the survey of the recycling station, the copper wire used for a single electric vehicle is about 0.5-0.8kg. It is conservatively estimated that the amount of copper used is about 6700 tons.
Copper is also widely used in aircraft, ships, trains and other large-scale transportation. Although the annual export volume is small, the amount of copper used in a single machine is very large. A Boeing 747 uses 9000 pounds of copper, including 632000 feet of copper wire, and the passenger plane uses about 2 per cent of its weight. The first application of copper in ships is marine propellers, which are mainly made of brass, bronze or copper-nickel aluminum alloy. Large cruise ship propellers can weigh up to 90 tons. Second, condensing pipes and sea pipes, usually made of brass or iron white copper. According to the statistics of the China Shipbuilding Industry Association, the amount of copper used in ships is about 2% of self-weight, 3%. The amount of copper used for the export of aircraft and ships in 2019 is about 1100 tons and 5300 tons.
Second, looking forward to the fourth quarter, where is it possible to exceed expectations?
Looking forward to the fourth quarter, copper consumption and exports are expected to continue to recover weakly as the global macro-economy repairs and overseas demand warms up. The bright spot is mainly in the small household appliances, transformers and electronic products that bring new demand due to the impact of the epidemic, which are expected to maintain a relatively high growth rate. The uncertainty is that the repair of high-value consumer durable goods such as large household appliances and automobiles is slow, and the economic impact caused by the epidemic in the major exporters of wires, cables and copper has not yet faded, and export repair may not be as good as expected.
Copper export consumption fell 12% year on year from January to July, and gradually repaired after the impact of the epidemic and economic blockade subsided, falling 7% in July compared with the same period last year. Based on our estimates based on the consumption structure of copper exports in 2019, exports are expected to continue to repair in the fourth quarter, narrowing the decline. Neutral expects the year-on-year decline to narrow to 1.8% in the fourth quarter and is expected to be the same as last year in an optimistic scenario.
2.1Macro logical clue: global economic activity repairs VS substitution effect fades, exports are expected to continue to recover weakly, and the epidemic remains a major risk.
Since the epidemic gradually eased and the economy was liberalized from the blockade, global economic activity has continued to repair steadily. Exports have been better than expected since the second quarter of 2020, rising 7.2% in July from a year earlier, significantly higher than 0.1% in the second quarter. China's exports have shown strong resilience under the impact of the epidemic. We believe that as the repair of global economic activity continues, but the substitution effect shown by Chinese exports will gradually fade, and macro exports are expected to continue to recover weakly in the short and medium term, the epidemic remains the main risk to export recovery.
Since May 2020, the impact of the epidemic on global economic activities has slowed marginally. PMI in the United States and the euro zone have returned to the economic range since June and July respectively, and economic repair has continued to exceed expectations. Gen global manufacturing PMI50.3, rose 2.4% in July, driving exports to pick up. From a specific point of view, the contribution of epidemic prevention materials continued to decline, and exports of electronic products and mechanical and electrical products continued to pick up. We believe that the most difficult period for exports is over and is expected to provide effective support for exports in the second half of the year.
As the manufacturing industry in Europe and the United States begins to recover strongly and the gap between supply and demand tends to ease, the substitution effect is expected to gradually fade in the future. Since the epidemic, due to the economic blockade measures and other factors, the economic repair of various countries has shown a certain imbalance, and the demand of the consumer side of the United States, Germany and Japan in the major economies in the early May-June of economic recovery is significantly stronger than that of supply-side repair, resulting in a large gap between supply and demand. At the same time, due to China's early step out of the impact of the epidemic, the repair of the production side is stronger than the consumer side, and the larger export demand, China's share of global exports has increased, which is an important reason for supporting the higher-than-expected exports in the second quarter. However, since June, the repair trend of the manufacturing industry in the United States has been better than that of the service industry, the European economy has been fully repaired, the manufacturing industry has recovered well, and the gap between supply and demand has begun to repair or even reverse in the future.
The epidemic affects the pace of economic recovery in export destination countries and remains the biggest risk for exports in the second half of the year. At present, among the major economies, the epidemic situation in Europe is relatively stable, and the United States has been seriously affected by the epidemic again and again, which has caused inconsistencies in economic demand-side repair between Europe and the United States: more than 20 states in the United States have announced suspension or postponement of economic restart measures, which has had a great impact on services and consumption, and retail sentiment continued to decline in July; retail sentiment in Europe continued to pick up in July, stronger than expected and better than the United States. Although it is unlikely that the United States will re-close its economy in the context of an election, if the epidemic continues to worsen, it is possible to hit overseas demand and drag down exports.
2.2 highlight of exports in the fourth quarter 1: small household appliances and electronic products, the growth rate is expected to reach 10% to 20%
Benefiting from the new demand brought by the impact of the epidemic, the exports of small household appliances and electronic products have shown high growth. From January to July 2020, the export of small copper household appliances totaled US $10.719 billion, down only 2.45% from the same period last year. The single month has become regular since June after the impact of the epidemic faded, with a strong growth rate.
There are several main reasons: first, the market penetration of small household appliances has increased, and the growth of export volume itself is very high, such as treadmills (the number of exports doubled in July compared with the same period last year), dishwashers (more than 40% year-on-year increase in July), etc., the demand is strong, and the year-on-year growth rate itself is very high. The epidemic only slightly affected exports in April and May until the export channels were opened. Export growth has quickly recovered to pre-epidemic levels, or even higher. Second, the epidemic has changed people's living habits, increased social distance, people stay at home longer, the emergence of some new needs, such as higher demand for disinfection, more demand for single-person kitchen utensils, and so on. Therefore, we are very optimistic about the future export of small household appliances, which is expected to grow by 12% and 15% in the fourth quarter.
The export of 160 million tablet computers from January to July 2020 went against the trend and increased by 18% compared with the same period last year, and the epidemic only had an impact on monthly exports in March. On the other hand, the export of mobile phones is slightly lower than that of tablets, with exports of 490 million units from January to July, down 4.7% from the same period last year. Repair began to be strong in June-July, with a growth rate of 37% year-on-month. The overall recovery situation of consumer exports of electronic copper is good. From January to July, we believe that the strong demand for electronics is mainly due to the social isolation brought about by the epidemic, which has led to the use of online office tools such as ZOOM and online teaching in schools, making people more dependent on the use of computers and mobile phones. It is expected that electronic exports will remain strong until the vaccine is widely used and the epidemic is completely eliminated. The export of mobile phones has certain seasonal characteristics. July-August is often the peak season, and it may decline in the fourth quarter. Exports of electronic products are expected to grow by 20% and 25% in the fourth quarter.
2.3 highlight of exports in the fourth quarter 2: small dry-type transformers for household appliances will support the growth of transformer exports
The export of transformer is not seriously affected by the epidemic. Due to the strong demand for small household appliances, small dry-type transformers have become regular in a single month compared with the same period last year due to the strong demand for small household appliances. From January to July 2020, transformer exports totaled US $1.8 billion, down only 0.3% from the same period last year, and the impact of the epidemic was not serious. Among them, the small dry-type transformer, which accounts for the highest proportion, increased by 13.7% in July compared with the same period last year, and the repair situation is strong. Small dry-type transformers are mainly used in large and small household appliances, such as drinking fountains, televisions, chargers and so on.
The main exporters of transformers in China are in Asian countries, such as Bangladesh, Egypt, Peru, Malaysia, Vietnam and so on. Due to the strong demand for small household appliances, small dry-type transformers are expected to maintain a high growth rate, supporting transformer exports to maintain high growth in the fourth quarter. Transformer exports are expected to grow by about 5% in the fourth quarter.
2.4 uncertainty of exports in the fourth quarter 1: wire and cable exports continue to repair or be disturbed by the Australian epidemic
The export of wires and cables has been repaired month by month, but it has not yet become a regular one, and the epidemic in Australia, the main exporting country, is still serious. Exports of wires and cables totaled 1.11 million tons from January to July 2020, down 15.9% from the same period last year. The single month has continued to narrow since May, but it still dropped 5% in July compared with the same period last year, and the repair process is slow. Australia is the main country that exports wires and cables in China, accounting for more than 12%. The epidemic in Australia worsened in July, and the number of wire and cable exports decreased by 23% in a single month compared with the same period last year, dragging down the overall export repair. According to data released by the WHO, the epidemic in Australia has continued to worsen so far, which could be a further drag on wire and cable exports before the epidemic improves.
2.5 uncertainty in exports in the fourth quarter 2: slow repair of consumer durables-large household appliances and cars
Large household appliances and cars are both consumer durables, and exports have continued to repair since the beginning of this year, but the repair is still slow and has not yet become a regular employee compared with the same period last year. A total of 35.24 million air conditioners were exported from January to July 2020, down 15% from the same period last year. From the point of view of the same period in a single month, the export repair of orders affected by the epidemic in January-February may be rushed from March to April, but it may be hit by a serious overseas epidemic and slowing down orders from May to June, and the export repair is not obvious. Judging from the seasonality of air conditioning exports, the first half of the year is often the peak season. Due to the impact of the epidemic this year, air-conditioning exports are not prosperous in the peak season, and the growth rate in the fourth quarter may not be particularly ideal.
Cars are durable goods with high unit value. After the impact of the epidemic, income uncertainty has increased, and people's demand has fallen rapidly. On the other hand, car demand in Europe and the United States and other developed countries has continued to decline in recent years, and the two factors are superimposed. It is expected that it will be difficult to improve in the fourth quarter. A total of 448000 cars were exported from January to July 2020, down 21.2% from the same period last year. From the perspective of a single month compared with the same period last year, May was the hardest hit. Since May, it has been repaired month by month compared with the same period last year, but it is still significantly lower than the previous level, falling 23.1% in July from the same period last year.
2.6 uncertainty of exports in the fourth quarter 3: copper with no signs of repair
Copper exports, which account for the highest proportion of copper export consumption, have not yet seen signs of repair due to poor economic repair in the main export places. China's main export destinations for copper and copper alloys are in Asia. According to customs data in 2019, with the exception of Taiwan and Hong Kong, the largest exporters are Southeast Asian countries such as Thailand, Vietnam and Indonesia. 14% of the total copper exports are exported to Japan and South Korea, and 10% of the copper is exported to the United States and EU countries. The economic foundation of Southeast Asia, the main exporter of copper products, is relatively weak, the epidemic situation in Vietnam and Indonesia is still serious, and the economic repair is not satisfactory.
From January to July 2020, copper exports totaled 437000 tons, down 16% from the same period last year. There was an increase of 19.63% in March compared with the same month last year, but the repair has not been sustained since then. From May to July, the rate of decline is more than 30% compared with the same period last year, and there are no signs of repair. Mainly due to the large decline in Southeast Asian countries among the major exporting countries, there are even signs of expansion in a single month compared with the same period last year. For example, Thailand has a year-on-year decline of more than 55% from May to July, and Vietnam has a monthly decline of more than 30% in July. The worst period for copper exports in other developed countries, such as South Korea, seems to be over, and marginal repairs are beginning to emerge. In the future, as the impact of the epidemic fades and the economy begins to repair, exports in Southeast Asia are also expected to improve.